Italy’s romance with the meritocracy was over and over again

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A “festival of the economy” sounds like a contradiction in terms. What now? A Bacchanal of Boredom? A feast of sophistry? Thomas Carlyle called economics “the grim science” with good reason.

But Turin’s International Business Festival lived up to its claim. Giuseppe Laterza, the festival impresario, drew inspiration for the festival from two sources: the Hay-on-Wye book festival in rural Herefordshire, which Bill Clinton described as the “Woodstock of the mind”, and a philosophy festival in Modena.

This year’s theme, Merit, Diversity and Social Justice, could not have been more timely. There is fierce global debate on the issue, with both right and left united in denouncing meritocracy as hypocrisy. Italy was also in constant turmoil over the relative claims of family loyalty and open competition, dolce vita and self-discipline, new men and old traditions.

In many ways, Italy is the world’s greatest pioneer of meritocracy. Venice in the early Middle Ages became a world power through open competition: ruled by a doge chosen by a council of wise men rather than a royal dynasty, it showered new men and new forms of economy, chiefly commenda, prototypes of today’s joint-stock companies. Venetian seafarers, estimated to number 36,000 in the early 15th century, made their way as far as China. Renaissance Florence saw in Jacob Burckhardt’s evocative phrase “the discovery of the individual,” meaning the discovery of the individual as a self-defining being rather than a member of a clan. The Risorgimento was a liberal revolution against feudal princes.

Italy has produced some of the greatest meritocratic thinkers in the world. While Niccolò Machiavelli dedicated “The Prince” to Lorenzo de Medici with his characteristic cynicism, he argued that “open republics” were more successful than principalities because they chose their leaders based on their suitability for the job and could get rid of them if themselves change their job descriptions. Vilfredo Pareto believed that history is shaped by the vital few and that the key to social progress is “the circulation of the elites”.

Italy also have a tradition of calling on performance-oriented rulers when the time calls for it, including Mario Monti, Lamberto Dini and Carlo Agezlio Champi in recent years. The current Prime Minister Mario Draghi is a meritocracy incarnate: he was trained as an economist at MIT, worked for the World Bank and Goldman Sachs and, after a period as Italian central banker, headed the European Central Bank during the euro crisis. he famously declared that he would “do whatever it takes” to save the euro. It’s hard for an Englishman to listen to Italians praising their current leader for his various virtues – his consummate professionalism, bourgeois patriotism and distaste for cheap populism – without feeling ashamed of the British prime minister. “He understands the essence of the market economy,” says Mario Calvo-Platero, a veteran Italian journalist. “He also knows how to get things done.”

But there is another side of Italy that stifles the principle of merit. Finally, “nepotism” derives from an Italian word, nepotismo. In 1297 Venice excluded new talent from its governing council, in what the Venetians called La Serrata, or the closure, culminating in 1315 with the publication of an official list of the finest families, the Book of Gold (Libro d’Oro). decline followed. The Renaissance collapsed in carnal decadence.

Today, Italy’s technocrats are temporary alternatives to two very different groups: a permanent ruling class of political bosses and placeholders held together by loyalty and clientelism, and populists who rail against the system dubbed La Casta in a 2007 best-selling book . only to replace one form of incompetence with another. This is Silvio Berlusconi’s country more than Mario Draghi’s.

This ambivalence about meritocracy runs through the backbone of Italian companies, the medium-sized family businesses that employ most of the country’s private sector workers and give it its unique character. From one perspective, these companies limit the spread of public sector clientelism: they operate in the open market and transmit skills from generation to generation. If they stumble, it’s their own fault. But from another perspective, they are barriers to open competition, as family ownership discourages outside talent and provincialism limits opportunities. Some become world stars: Technogym for exercise equipment, Zegna for fashion, Lavazza and Illycafe for coffee and Eataly for restaurants and food distribution. Most hit under their weight.

The general mood of the conference was skeptical about the fall of meritocracy. Michael Sandel was warmly received for his condemnation of the “tyranny of merit”. Pedro Gomes was enthusiastic about the fact that “Friday is the new Saturday”. Many participants focused on the difficulties in creating a meritocracy: how exactly to define “merit”? How do you measure it even if you can define it? How do you create equal opportunities in a world of growing inequality? And besides, isn’t meritocracy just an excuse for plutocracy? Local activists told stories of social exclusion and racial discrimination.

I have argued elsewhere, as I argued at the conference, that there are compelling answers to all of these questions. I have also argued on numerous occasions in my columns, as I argued at the conference, that the best solution to social exclusion is to look more vigorously for talent across all segments of the population (and in every possible form), rather than looking for it as a focus on the rights and wrongs of the group. But as much as I enjoyed the back-and-forth of the process, I couldn’t shake off one overwhelming thought: that Italy of all places is the last thing it needs is a large helping of meritocracy skepticism. Whatever is wrong with meritocracy is nothing compared to its opposite – the stifling system of patronage and clientelism that is stifling the country.

Italy’s lack of meritocracy contributes to its entrepreneurial malaise. Only nine Italian companies make the Forbes 2022 list of the 2000 largest publicly traded companies in the world, with the largest, electricity company Enel, coming in at 110th, followed by oil and gas group Enel at 11th. Fiat, the The automaker, who built modern Turin is now part of a conglomerate called Stellantis, headquartered in Amsterdam. Ferrero, the maker of Nutella, has relocated to Luxembourg, although residents of the company’s hometown of Alba, near Turin, wept by the thousands when company founder Michele Ferrero died. The company that makes Campari, the liquid accompaniment to the Dolce Vita, has moved its headquarters to the Netherlands, Bulgari has been incorporated into France’s LMVH and Gianni Versace International is owned by Michael Kors USA.

A lack of meritocracy is driving talent abroad. American universities are heaven for Italians like Luigi Zingales, a renowned finance professor at the University of Chicago’s Booth Business School, who said that as a young man he was faced with the choice of either staying in Italy or going to Italy for years as a bag carrier a senior professor, with every chance that the professor will offer his patronage to someone else, or go to America and be judged on his publications. Draghi’s superior at MIT was another expatriate Italian, Franco Modigliani. The World Bank employs so many Italian economists that during the hot summer, Italian is the dominant language in their private country club – sorry, “recreation center”.

With talent fleeing, corporate Italy is becoming a gerontocracy. The country’s most prominent businessmen (and “men” is aware) are octogenarians: Berlusconi (85), Leonardo Del Vecchio of Luxottica (87), Luciano Benetton (87) and Giorgio Armani (87). According to a 2017 study by Guido Corbetta of Bocconi University, half of first-generation family businesses have an owner/boss who is over 60 and a quarter have one over 70.

Above all, the lack of meritocracy reduces the country’s productivity and thus its long-term prosperity. Mr. Zingales has teamed up with another economist, Bruno Pellegrino of the University of Maryland, to study the impact of meritocracy on productivity. They created a meritocracy index of advanced countries based on two things: the World Economic Forum’s survey of who holds leadership positions (essentially whether they are appointed on the basis of connections or qualifications) and, more generally, the level of meritocracy in the broader society (quality of government, rigidity of labor laws, quality of court decisions, size of the black market, vibrancy of the high-tech sector). Sweden comes at the top and Italy at the bottom.

The authors also showed that low performance is becoming more of a productivity problem as information technology takes hold. Italy’s loyalty-based management style had no negative impact on productivity growth in the decades before 1995. But when the IT revolution began in the 1990s, loyalty-based management reduced Italy’s productivity growth by between thirteen and sixteen percentage points. The penalty for refusing to embrace meritocracy is growing rapidly.

The most compelling argument I heard all week was about quality of life. America’s super-meritocrats are perhaps more productive than their Italian counterparts, with their 80-plus-hour workweeks and generously paid jobs at giant consultancies, law firms or investment banks. But at what cost? Neglecting their kids, rushing their meals, answering emails late into the night. In contrast, Italians enjoy long lunches and even longer dinners (Turin was the birthplace of the slow food movement) while working for companies that work on a human scale.

I, too, prefer long lunches to bloated work hours, especially when so much work time these days is spent filling out convoluted forms from today’s equivalent of Charles Dickens’ transcription office, Human Resources. Ultimately, however, the argument is unconvincing, not least because so many bright young Italians are voting with their feet and moving to the United States. In the long run, you can’t sustain the good life of slow food and lazy nights without a productive economy to fund it. Meritocracy is not the opposite of a civilized society, but the prerequisite for its survival.

This column does not necessarily represent the opinion of the editors or of Bloomberg LP and its owners.

Adrian Wooldridge is the global economics columnist for Bloomberg Opinion. A former contributor to The Economist, he is most recently the author of The Aristocracy of Talent: How Meritocracy Made the Modern World.

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